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INTERIM STUDY REPORT
Insurance Committee
Rep. Charles Key, Chairman
Oklahoma House of Representatives
Interim Study 11-077, Rep. Glen Mulready
October 10, 2011
Clarification of rebating issues related to “value added services”
Rep. Mulready
• This study resulted from a bill this session specifically related to offering a discount for
medical malpractice insurance if the physician also had used the same company for the
credentialing process. Some claimed this was rebating and a violation of our insurance
laws.
• The Insurance Dept. eventually ruled that it was not and delivered a decision to the parties
involved.
• This interim study is not about medical malpractice and physician credentialing since there is
pending litigation about that.
• The health insurance industry faced a similar situation a few years ago related to rebating and
enticements.
• The goal is to clarify the overall issue of value-added services (VAS) so overall so this issue
does not continue to pop up in other segments of the industry.
• There may not be an easy solution, but hopefully we can be more efficient than continuing to
return to each Insurance Commissioner or administration for a ruling.
• This issue used to be simple but has become more complicated with technology, increased
competition, and increased drive for efficiency from businesses.
• Can we clarify this and can we be fair without impacting the non-insurance business folks?
• There is no pending legislation and he has no agenda other than clarification.
Dan Ramsey, president and CEO
Independent Insurance Agents of Oklahoma (IIAO)
ddr@iiaok.com
• This is a complicated issue, and there is no consistent definition of VAS.
• He is unable to advise his 500 member agencies and the 5,000 employees he represents.
• We need to describe in legislation what it is we are talking about.
• The guiding statute is Title 36, Sec. 1204 in which 13 items are defined as unfair methods
of competition and unfair and deceptive acts.
• Of those, he highlighted false info and advertising – ie: GM/MetLife last year offered
free auto insurance for a year with the purchase of a new vehicle. Insurance Dept.
disapproved the filing eventually.
• Rebates – If it is not in the contract, you can’t give it away.
• Inducement – No prize over $25. Can an insurance agent take clients or potential clients
to OU football game? It is vague.
• Consultants – Potential conflict of interest. Can’t serve more than one master.
• Every state but CA and FL have rebating prohibitions, some of which date back to the
19th century.
• Soft markets like our current economic situation often tempt producers into unethical
practices.

INTERIM STUDY REPORT
Insurance Committee
Rep. Charles Key, Chairman
Oklahoma House of Representatives
Interim Study 11-077, Rep. Glen Mulready
October 10, 2011
Clarification of rebating issues related to “value added services”
Rep. Mulready
• This study resulted from a bill this session specifically related to offering a discount for
medical malpractice insurance if the physician also had used the same company for the
credentialing process. Some claimed this was rebating and a violation of our insurance
laws.
• The Insurance Dept. eventually ruled that it was not and delivered a decision to the parties
involved.
• This interim study is not about medical malpractice and physician credentialing since there is
pending litigation about that.
• The health insurance industry faced a similar situation a few years ago related to rebating and
enticements.
• The goal is to clarify the overall issue of value-added services (VAS) so overall so this issue
does not continue to pop up in other segments of the industry.
• There may not be an easy solution, but hopefully we can be more efficient than continuing to
return to each Insurance Commissioner or administration for a ruling.
• This issue used to be simple but has become more complicated with technology, increased
competition, and increased drive for efficiency from businesses.
• Can we clarify this and can we be fair without impacting the non-insurance business folks?
• There is no pending legislation and he has no agenda other than clarification.
Dan Ramsey, president and CEO
Independent Insurance Agents of Oklahoma (IIAO)
ddr@iiaok.com
• This is a complicated issue, and there is no consistent definition of VAS.
• He is unable to advise his 500 member agencies and the 5,000 employees he represents.
• We need to describe in legislation what it is we are talking about.
• The guiding statute is Title 36, Sec. 1204 in which 13 items are defined as unfair methods
of competition and unfair and deceptive acts.
• Of those, he highlighted false info and advertising – ie: GM/MetLife last year offered
free auto insurance for a year with the purchase of a new vehicle. Insurance Dept.
disapproved the filing eventually.
• Rebates – If it is not in the contract, you can’t give it away.
• Inducement – No prize over $25. Can an insurance agent take clients or potential clients
to OU football game? It is vague.
• Consultants – Potential conflict of interest. Can’t serve more than one master.
• Every state but CA and FL have rebating prohibitions, some of which date back to the
19th century.
• Soft markets like our current economic situation often tempt producers into unethical
practices.